Dubai in bilateral gold rush with China

The 'City of Gold' has been quick to bolster its commercial ties with the republic given China was the world's largest gold producer, second-largest consumer and fifth-largest holder of reserves in 2008.

Dubai Multi Commodities Centre's (DMCC) gold trade through Dubai topped $14.69bn in the first half of 2009, a 12% increase on 2008. A total of 300 tonnes of gold was imported, a 13% increase, while exports grew 19% to reach 213 tonnes.

At present Switzerland and Iran are Dubai's top gold importers, but trading opportunities with China are growing due to an increasingly liberalised and competitive retail market and range of two-way initiatives.

"China is our best bet right now. I would say that China has the highest demand for gold and this will help jewellers in the UAE make up for the losses they may have seen in the local market,"

said Harendra Kailath, director for gold at the DMCC.

These strong commercial links will be clearly evident at the 14th edition of Dubai International Jewellery Week, which will be held at the Dubai International Convention and Exhibition Centre on 4-7 November 2009.

An international focus has long been one of the exhibition's hallmarks, and this year's collection of country pavilions is no exception featuring 10 group participating countries, with 3 debutants in the form of Japan, the U.S and China.

"Given the current economic climate, it is a positive sign for the region when we welcome three new country pavilions, especially China. Dubai International Jewellery Week will provide an excellent platform to develop new business opportunities and cement existing ties," said Trixie Loh, Senior Vice President, Dubai World Trade Centre.

To provide a focused environment, the show is split into three distinct vertical sectors namely; Jewellery Trade Dubai, Jewellery Collections Dubai, and Areeq Dubai - a collection of the latest designs, dedicated to the pre Christmas sales period.

These three tailored events deliver focused forums for traders, consumers and exhibitors with more than 400 exhibitors from over 20 countries.

Underscoring improved trading links between Dubai and China, earlier this year, DMCC hosted a high-profile government and trade delegation from Shenzhen in China to examine bilateral trade opportunities in a range of commodities.

Following DMCC's participation at the Asia Gold Focus 2009 Conference in Guangzhou, Chinese gold and jewellery manufacturers are now increasingly eager to work closely with Dubai-based companies.

In April last year, DMCC signed a Memorandum of Understanding with Shanghai Financial Futures Exchange. Guangzhou has a flourishing jewellery processing and manufacturing industry, with production bases spread across Panyu - where UAE firms have set up factories in Huadu and Conghua.

Many investors still regard gold as an effective hedge against volatile currency trading and see it as a safe haven, and valuable inflation-hedging instrument, during times of recession. Indeed, this has been one of the main drivers in the Chinese market, which has seen increased numbers of consumers buying 24k gold jewellery. Little surprise then that gold prices have risen above $900 an ounce, compared with a low of $680 last October.

There are more than 39 major gold jewellery manufacturers in China. Pure gold manufacturers in Shenzhen produce around 70% of gold jewellery in China and Bai Tai, Yuehao, Jinye, Gold Dragon, Cui Liu, AnShenghua are among the top manufacturers.

The UAE's Asian ties extend to Singapore, which exported about $5.7bn worth of jewellery and precious metals last year, an increase of nearly $2bn from 2007 - much of which was spurred by UAE demand.